Getting to grips with annuities, drawdown and pension planning can all feel a bit baffling, so if you are confused by the decisions you need to make, you may want to seek out professional help.
But where can you turn for independent guidance you can trust?
Here are some tips on where to go to get your retirement queries answered.
Where can I get free pension advice?
At the moment, you can get free pensions advice through Pension Wise. This guidance service was launched alongside the pension freedoms back in April 2015, and comprises telephone support from The Pensions Advisory Service (TPAS), and face-to-face guidance from Citizens Advice. (The pension freedoms essentially give savers over 55 more choice over when and how they use their pension pot).
Find out more about Pension Wise here or call on 0800 138 3944. Find out more about The Pensions Advisory Service here or call 0800 011 3797. You can also get more information from Citizens Advice here.
In April 2019, the Money and Pensions Service (MaPS) launched as a combined entity to replace the Money Advice Service, Pension Wise and The Pensions Advisory Service. Its aim is to help consumers make better financial decisions. It is due to launch its UK strategy in 2020. Find out more about MaPS here.
What advice will I get?
While all these resources will offer guidance, this will be fairly basic, and you will not be given recommendations on what to do with your money. Instead, the aim is to help you understand your options.
What about paid-for pension advice?
Given that pension planning is one of the biggest decisions you will ever have to make, you may want to consider paying for advice – from a financial adviser.
After all, it could involve a potentially big sum of money, and the decision you make is likely to be irreversible.
When choosing an adviser, the key is to pick someone who specialises in pensions and retirement income advice, as this should ensure you get the best guidance, tailored to your particular needs.
You should always choose an adviser authorised by the Financial Conduct Authority. Check out https://register.fca.org.uk/.
That way, if things go wrong, and you feel their recommendations were not suitable, you may have recourse to the Financial Ombudsman Service – and may be able to claim compensation.
How much will pension advice cost?
If you go to The Pensions Advisory Service, Pension Wise or Citizens Advice, the advice you get will be free.
But if you go to a professional, you are going to have to pay: good financial advice costs money.
The key is to understand the charging structure. This means finding out whether the adviser charges by the hour, whether there’s a fixed cost, or a percentage of the money you’re investing.
As a guide, you could expect to pay a financial adviser an hourly rate of around £180.
Are there different types of advice?
When choosing an adviser, it’s important to understand what type of advice is being offered.
A ‘restricted’ adviser will only be able to recommend certain products or a smaller range of products from a limited range of providers – and this could mean less choice.
By contrast, a fully ‘independent financial adviser’ (IFA) must consider all products and providers across the market when making a recommendation.
How to find a pensions financial adviser
When searching for a pension adviser, it’s always worth speaking to family, friends and colleagues and asking for recommendations. Word of mouth can go a long way in the world of financial planning.
Try sites such as Unbiased and VouchedFor which have listings of advisers – and tools which enable you to search by different criteria, including specialism or location. The Money Advice Service also has a directory here.
Tips when choosing a pension adviser:
- Speak to two or three firms or individuals to compare service, cost, experience and qualifications
- See if the adviser offers a free introductory session. Use this session to work out if the adviser is right for you
- Check out independent client reviews and look for consistently positive feedback in testimonials
- Trust your gut. Find someone you are happy to share personal information with
- Be sure you and the adviser will be able to work together
How to prepare for a pensions advice meeting
When going to a meeting about pensions, you need to be willing to talk about your health, marital status, the rate of tax you pay, and the assets you hold. You also need to be willing to share potentially sensitive information, such as how much you earn or what debts you have.
As you’re likely to have lots of queries and concerns, go to your meeting armed with a list of the things you want answered. Don’t be afraid of asking questions, no matter how stupid they may seem. You need to understand everything that’s being discussed.
A final word
Remember that the pension fund you have built up over your working life is going to need to last throughout your retirement.
If you make the wrong decision, you could end up paying higher charges, too much tax, or could find yourself in investments that aren’t right for you. This could ruin your finances in retirement.
With this in mind, seeking professional advice with your pension planning can make a lot of sense.
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